Outrageous Postgraduate Loan Repayment Threshold - £21k (under minimum wage)

Emmia

If you don't want to take a loan, or can't afford to not work then the OU offers many Masters courses which can be paid for on a module by module basis. 

Squeaky_Kleen

Emmia said:

Squeaky_Kleen said:

Emmia said:

Squeaky_Kleen said:

Ed-1 said:

Squeaky_Kleen said:

Wow. 3 replies and not one person able to say "yes that does seem strange and out of order to have a repayment threshold lower than minimum wage".   Though in response to Ed-1, I guess that means there still a chance that common sense will prevail, but I'm not holding my breath.

The Government would argue that the intention is for postgraduate loans to be fully repaid and the repayment rate is only 6% of marginal earnings so is very generous. Some policy think tanks have suggested aligning student loan thresholds to match income tax thresholds which would mean a threshold of £12,570.

I imagine the demand for university places would more than half should such repayment thresholds be implemented.  The sad truth is that  48% of graduates do not progress on to getting graduate level jobs.  That's a shocking stat, and will only get worse as AI replaces jobs.   It's quite easy to see how people will opt to do  the Masters out of sheer fear of becoming part of the 48% if they don't.  But still some of those with Masters degrees will not get the jobs they desire, and asking those people to repay their loan from a minimum wage job is vile, disgusting and unconscionable.  

That's a strong view. perhaps people should consider whether a masters course will give them the employment they want / salary they want before embarking on it??

Or wait 10/20 years and self fund as I have.

Factually anyone evidence based would say "yes, taking a Masters does statistically improve your likely earning potential". But as with undergraduate degrees, the student loans should start to be repaid once you're seeing the financial benefit. This is the correct way to implement student loan repayments. 

I'm not sure why you're so keen for people earning minimum wage to be forced to repay their postgraduate loans? Living on the breadline is hard enough as it is.

A masters is a choice, much like many things in life.

I'm not in favour of borrowing (of any sort) which isn't repaid by the borrower, and that includes student loans. If you take a normal loan out, they don't wait until you earn £x for repayments - you start repaying pretty quickly.

I don't understand why you think repayment is outrageous.

A student loan is not like a normal loan though.  It never has been.  In an ideal world, sure, everyone pays back every penny of their student loans.  But how the hell can that happen when 48% of graduates never get graduate level work and they've got debts of £45k+ aged 21.   You've got to live in the real world and not your ideal world.  

And in the real world, it is reasonable that graduates get to demonstrate their degrees are at least a little bit financially fruitful before demanding repayment.

Emmia

Squeaky_Kleen said:

Emmia said:

Squeaky_Kleen said:

Emmia said:

Squeaky_Kleen said:

Ed-1 said:

Squeaky_Kleen said:

Wow. 3 replies and not one person able to say "yes that does seem strange and out of order to have a repayment threshold lower than minimum wage".   Though in response to Ed-1, I guess that means there still a chance that common sense will prevail, but I'm not holding my breath.

The Government would argue that the intention is for postgraduate loans to be fully repaid and the repayment rate is only 6% of marginal earnings so is very generous. Some policy think tanks have suggested aligning student loan thresholds to match income tax thresholds which would mean a threshold of £12,570.

I imagine the demand for university places would more than half should such repayment thresholds be implemented.  The sad truth is that  48% of graduates do not progress on to getting graduate level jobs.  That's a shocking stat, and will only get worse as AI replaces jobs.   It's quite easy to see how people will opt to do  the Masters out of sheer fear of becoming part of the 48% if they don't.  But still some of those with Masters degrees will not get the jobs they desire, and asking those people to repay their loan from a minimum wage job is vile, disgusting and unconscionable.  

That's a strong view. perhaps people should consider whether a masters course will give them the employment they want / salary they want before embarking on it??

Or wait 10/20 years and self fund as I have.

Factually anyone evidence based would say "yes, taking a Masters does statistically improve your likely earning potential". But as with undergraduate degrees, the student loans should start to be repaid once you're seeing the financial benefit. This is the correct way to implement student loan repayments. 

I'm not sure why you're so keen for people earning minimum wage to be forced to repay their postgraduate loans? Living on the breadline is hard enough as it is.

A masters is a choice, much like many things in life.

I'm not in favour of borrowing (of any sort) which isn't repaid by the borrower, and that includes student loans. If you take a normal loan out, they don't wait until you earn £x for repayments - you start repaying pretty quickly.

I don't understand why you think repayment is outrageous.

A student loan is not like a normal loan though.  It never has been.  In an ideal world, sure, everyone pays back every penny of their student loans.  But how the hell can that happen when 48% of graduates never get graduate level work and they've got debts of £45k+ aged 21.   You've got to live in the real world and not your ideal world.  

And in the real world, it is reasonable that graduates get to demonstrate their degrees are at least a little bit financially fruitful before demanding repayment.

You don't need to go straight to a Masters from your undergraduate degree,  you can get a job just with your first degree.

The 48% is based on what timescale (how many years after graduation) and what definition of "graduate level work"? 

I got a proper job 2 years after graduating, doing temp and shop work until then. I probably took 3-4 years to get a job where my degree level learning could be applied.

Waiting to do postgraduate study may mean your employer will fund it, or you might pick a different course which would lead you down a different (better paying?) career path. I wouldn't have picked the MA I'm studying straight after my undergraduate degree.

You really don't need to rush headlong from one to the other.

Ed-1

Threshold remains frozen from April:
https://www.gov.uk/government/news/postgraduate-income-contingent-student-loans-repayment-threshold-confirmed--2

Squeaky_Kleen

Ed-1 said:

Threshold remains frozen from April:
https://www.gov.uk/government/news/postgraduate-income-contingent-student-loans-repayment-threshold-confirmed--2

Totally outrageous.  Why on earth isn't the NUS making a bigger deal out of this?

Emmia

Squeaky_Kleen said:

Emmia said:

Squeaky_Kleen said:

Emmia said:

Squeaky_Kleen said:

Ed-1 said:

Squeaky_Kleen said:

Wow. 3 replies and not one person able to say "yes that does seem strange and out of order to have a repayment threshold lower than minimum wage".   Though in response to Ed-1, I guess that means there still a chance that common sense will prevail, but I'm not holding my breath.

The Government would argue that the intention is for postgraduate loans to be fully repaid and the repayment rate is only 6% of marginal earnings so is very generous. Some policy think tanks have suggested aligning student loan thresholds to match income tax thresholds which would mean a threshold of £12,570.

I imagine the demand for university places would more than half should such repayment thresholds be implemented.  The sad truth is that  48% of graduates do not progress on to getting graduate level jobs.  That's a shocking stat, and will only get worse as AI replaces jobs.   It's quite easy to see how people will opt to do  the Masters out of sheer fear of becoming part of the 48% if they don't.  But still some of those with Masters degrees will not get the jobs they desire, and asking those people to repay their loan from a minimum wage job is vile, disgusting and unconscionable.  

That's a strong view. perhaps people should consider whether a masters course will give them the employment they want / salary they want before embarking on it??

Or wait 10/20 years and self fund as I have.

Factually anyone evidence based would say "yes, taking a Masters does statistically improve your likely earning potential". But as with undergraduate degrees, the student loans should start to be repaid once you're seeing the financial benefit. This is the correct way to implement student loan repayments. 

I'm not sure why you're so keen for people earning minimum wage to be forced to repay their postgraduate loans? Living on the breadline is hard enough as it is.

A masters is a choice, much like many things in life.

I'm not in favour of borrowing (of any sort) which isn't repaid by the borrower, and that includes student loans. If you take a normal loan out, they don't wait until you earn £x for repayments - you start repaying pretty quickly.

I don't understand why you think repayment is outrageous.

A student loan is not like a normal loan though.  It never has been.  In an ideal world, sure, everyone pays back every penny of their student loans.  But how the hell can that happen when 48% of graduates never get graduate level work and they've got debts of £45k+ aged 21.   You've got to live in the real world and not your ideal world.  

And in the real world, it is reasonable that graduates get to demonstrate their degrees are at least a little bit financially fruitful before demanding repayment.

Could you perhaps clarify this statement?

1. What exactly is "graduate level work" how do you define that / how does the survey define that?

2. 48% never get graduate level work? Does the survey have a fully working crystal ball? Or does this actually relate to X number of years after graduation? Or to graduates on specific courses. Or graduates who attended specific universities?

3. I still don't understand how it is outrageous for people to repay borrowing they have willingly taken out, with terms that are known about...

If someone takes out loans for undergraduate and postgraduate study, both need to be repaid simultaneously, much like if you have a car loan and a personal loan for home improvements, they would be paid back at the same time.

I suppose the difference with those loans though is that lenders check whether a borrower can afford the loans...

Squeaky_Kleen

The repayment threshold for Undergraduate loans taken out since 2012 is £27,295.   So if in April you're earning minimum wage of £23,795 (based on 40 hrs), which you don't need any type of degree to earn such a figure,  then there's nothing simultaneous about your repayments.. it's pure victimisation of those with Postgraduate Loans.  I remember speaking to the Student Loans company back in 2017 before I took the loan out and they said that the repayment threshold would move with the times, which I had no reason to disbelieve as this was the practice with Undergraduate loans. 

Regarding graduate stats.. there's quite a few different stats quoted depending which article you read and what year it was made.   So having looked further lets use the stat that is most trustworthy, published June 23 by the Department for Education: 66.3% of Graduates aged 16-64 (working age), domiciled in England, have High Skilled employment, which is defined as being in a job categorised within the Standard Occupation Classification (SOC) codes 1-3.   Graduate labour market statistics, Calendar year 2022 – Explore education statistics – GOV.UK (explore-education-statistics.service.gov.uk)

So that is to say a whopping 33.7% of working aged graduates are not in High Skilled Employment.   Granted that is better than the 48% statistic I'd found a few months ago, however it is still a staggeringly high proportion.  So obviously you can see why many students will feel pressured into taking Postgraduate Loans for postgraduate courses when there's a 1 in 3 chance that their Batchelors degree will not prove to be fruitful by itself. 

And then we take these people that have invested more time, hard work and stress than those with just Batchelor Degrees, and we tell them that their reward is they get to start repaying their loans when they earn less than minimum wage.  It's beyond shocking to any reasonable person.
 

Emmia

Squeaky_Kleen said:

The repayment threshold for Undergraduate loans taken out since 2012 is £27,295.   So if in April you're earning minimum wage of £23,795 (based on 40 hrs), which you don't need any type of degree to earn such a figure,  then there's nothing simultaneous about your repayments.. it's pure victimisation of those with Postgraduate Loans.  I remember speaking to the Student Loans company back in 2017 before I took the loan out and they said that the repayment threshold would move with the times, which I had no reason to disbelieve as this was the practice with Undergraduate loans. 

Regarding graduate stats.. there's quite a few different stats quoted depending which article you read and what year it was made.   So having looked further lets use the stat that is most trustworthy, published June 23 by the Department for Education: 66.3% of Graduates aged 16-64 (working age), domiciled in England, have High Skilled employment, which is defined as being in a job categorised within the Standard Occupation Classification (SOC) codes 1-3.   Graduate labour market statistics, Calendar year 2022 – Explore education statistics – GOV.UK (explore-education-statistics.service.gov.uk)

So that is to say a whopping 33.7% of working aged graduates are not in High Skilled Employment.   Granted that is better than the 48% statistic I'd found a few months ago, however it is still a staggeringly high proportion.  So obviously you can see why many students will feel pressured into taking Postgraduate Loans for postgraduate courses when there's a 1 in 3 chance that their Batchelors degree will not prove to be fruitful by itself. 

And then we take these people that have invested more time, hard work and stress than those with just Batchelor Degrees, and we tell them that their reward is they get to start repaying their loans when they earn less than minimum wage.  It's beyond shocking to any reasonable person.
 

Over what timescale?

I am currently studying for a Masters, but I've managed to make a reasonably successful career off the back of a 2:2 degree from a Russell group Uni in Geography. I started repaying my loan when I earned £10k per year. 

Admittedly I graduated in the early noughties, with a much smaller loan to repay, but nonetheless it is perfectly possible to have a good career without a Masters. I work with people at the same level, who have no degree.

I'm doing a MA now for my own enjoyment, no other reason in terms of career etc.

Edit: is this through choice, i.e. they've chosen to work in a job which is not "graduate level" for other reasons - e.g. for flexibility whilst raising a family, or is it because they've taken a BA in Mickey Mouse Studies, and Master's in Disney Studies and employers don't take that seriously as a qualification on applications.

I think the reality is that there are probably too many people with poor quality degrees from low quality universities - choice of degree and uni does matter. 

As I said, no one is forced to do a degree or a masters - but perhaps when you're 18, 20, 25 you can't see that? You're still blinkered by the education system... Your mates are all off to uni etc.

theoretica

Many graduate degrees are not aiming to be vocational, and people do them because they want to, not because they want the earnings afterwards. I know lots of people who enjoyed their higher degrees but didn't expect to find a well paying secure job related to them (the arts, egyptology...).

silvercar

theoretica said:

Many graduate degrees are not aiming to be vocational, and people do them because they want to, not because they want the earnings afterwards. I know lots of people who enjoyed their higher degrees but didn't expect to find a well paying secure job related to them (the arts, egyptology...).

I’d guess a fair number would want the fact they had a degree to open up career possibilities, even if they weren’t using the knowledge  they gained from their degree. Back in the mid 80s a popular career choice for geography graduates was supermarket management graduate trainee programmes!